Abstract:
This thesis investigates the incentives for the conservation of biodiversity with
multiple decision-makers by comparing the market equilibrium solution to the social
optimum under different assumptions. Geographic land areas are modeled to permit two
conflicting uses: conservation of biodiversity or conversion of the land for some
economic activity. Two main models are developed The first model makes use of a
downward-sloping demand curve for biodiversity. This demand can represent the partial
or total economic value of biodiversily, or more tangibly, the harvest demand for a given
rare species. The market equilibrium will provide less of the species than would be
socially optimal because of the oligopolistic structure of the supply side of the market.
The second model assumes a "blueprint" demand function for biodiversity where species
are seen as genetic and chemical "lead" or "blueprint" resources for industrial use. In
the static model, rent can be obtained only f a unique landowner possesses the species of
value, otherwise the demanding industry will bid the price down until no rent is captured
In this case, the market equilibrium of conservation is socially optimal. In a dynamic
model, however, this result is not obtained The multiple stage model reveals a dynamic
externality. Further modeling and comparison with real world data are needed to
appreciate the importance of this divergence of results. The problem of imperfect
substitute species is investigated, and too much conservation can occur in the
"blueprint" case from society's point of view.
